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Lead Generation Is Not the Problem: Here’s Why You Should Prioritize Your Lead Conversion Strategy

Lead Generation is Not the Problem: Here’s Why You Should Prioritize Your Lead Conversion Strategy

When it comes to the challenges involved in growing your real estate business, many industry professionals will point to acquiring leads. 

The truth is, there are ample opportunities at the top of the marketing funnel to find leads and obtain their contact information. 

The bigger dilemma is successfully converting those leads into customers. 

In this article, we will break down why lead conversion—not acquisition—is the real problem in real estate and practical ways to solve it. 

Why Lead Acquisition Is Not the Problem

One reason that lead acquisition is not the issue in real estate is there is plenty of demand for properties—both in the residential and commercial space. 

Up to 6.12 million existing homes were sold in 2022 alone. And this record-high activity was achieved in a year that was generally unfavorable to homebuyers, due to rising property prices and skyrocketing mortgage rates. Yet another 822,000+ newly constructed properties also get purchased every year. Meanwhile, there are approximately 107,000 real estate brokerages in the US market. As not all of them are equally big and active, the good companies garner more than enough interest from homebuyers and homesellers.

Moreover, according to Redfin, the median homeowner tenure in the 2021 US market was 13.2 years. This means that every 13 years or so, the average American household will look for an agent to help them sell their home and buy a new one.

Due to this ongoing demand for homeownership, an agent garners an a few dozen leads per month though the number varies between less experienced and more experienced realtors. This number of leads is attainable when 53% of agents spend as little as $0-$250 monthly on lead generation. A few dozen real estate leads significantly exceeds the number of clients that an agent can realistically handle, confirming that lead acquisition is not the actual problem in real estate.

Moving forward, lead acquisition is likely to become even less of an issue in the industry. Housing market trends show that the demand for new homes is expected to increase this year. Property prices are flattening, mortgage rates are slowly dropping, and more millennials are searching for homes. At the same time, rental rates are expected to increase faster than home values—pushing many to consider homeownership as the more financially viable option. 

And that’s only within the residential space. Over 4 million new businesses get started in the US each year. As e-businesses are still a relatively small share of the total, this translates into high demand for buying or renting commercial spaces. found that 90% of US companies will require employees to return to the office for at least a few days per week. Therefore, more people will look for rental apartments or apartments to buy—especially in major cities. Companies will also need office spaces for their renewed in-person operations.

In addition, the hospitality industry is expected to bounce back as Covid-related restrictions are eliminated and people resume travel to make up for the past few years.

With such a high demand for real estate in both the residential and commercial space, lead acquisition is not and has never been a significant challenge. 

And while the industry may be evolving, the need for brokers and agents is still going strong. According to the National Association of Realtors (NAR), 86% of buyers purchased their home through a real estate agent or broker in 2022. This number has steadily increased over the years, with only 69% of buyers going through a real estate agent or broker in 2001.  

The best brokers and agents can ace this part of the process by leveraging the right marketing strategies and establishing a solid online presence. It’s converting these leads into customers where many get stuck. 

The Low Real Estate Lead Conversion Rate

According to NAR, the average real estate lead conversion rate is between 0.4% and 1.2%. 

This means that for every 100 leads you are able to generate, only one will become a client. Moreover, the average time it takes to convert leads acquired online is between 6 and 24 months.

Other recent studies indicate slightly higher conversion rates for real estate, but the industry still falls short. Ruler Analytics reported an average lead conversion rate of 2.4% for real estate, which is lower than the numbers for healthcare (3.0%), finance (3.1%), legal (3.4%), and industrial (4.0%) businesses. It is also below the average rate of 2.9% for all 14 industries included in the study. 

This low and slow conversion rate is partly due to the nature of the real estate industry, but there are also some mistakes agents make that can hinder their success. Two common reasons why so few leads turn into customers include: 

High Transaction Costs in Real Estate

During a real estate transaction, there is a significant amount of money at stake. According to Zillow data, the median value of a US home is over $357,000. As this is the largest purchase that any of your clients will make in their lifetime, it simply cannot be handled with the same speed and inattentiveness as buying clothes or electronics.

The value of the purchase contributes significantly to the low conversion rate in the real estate industry. This is backed up by the low rates in other high-cost industries. The conversion rates in the automotive and luxury industries are comparable to those in real estate, at 0.7% and 1.1%, respectively. 

This reality is further exacerbated by the many requirements and processes that go into buying a home. These include learning about the local market, finding the best mortgage provider, getting pre-approved and approved, undergoing home inspections and appraisals, and choosing an agent.

On average, purchasing a real estate property takes over six months and the process can easily extend into a year or more. 

While these factors may be unavoidable, the way you communicate with leads is another piece of the puzzle.

A Weak Lead Nurturing Process

Another cause of low conversion rates is ineffective lead nurturing processes. Many agents will make the mistake of putting the majority of their efforts into lead acquisition. Although this is important, lead conversion should be just as high of a priority. After all, you cannot expect every lead who shows interest to automatically turn into a client. 

For real estate professionals, a key component of converting more leads is developing a comprehensive lead nurturing strategy. 

How to Solve the Lead Conversion Challenge


Carefully evaluate your marketing funnel to determine whether you are putting enough effort into lead nurturing and conversion. If your agency is struggling with a lack of sufficient business, there is a good chance that the issue lies at the bottom of the funnel and not at the top.

Here are a few concrete steps that you can take to address this: 

Engage Leads the Right Way, Right Away

Recent research from Placester found that over 55% of homebuyer leads begin their home search online. And when it comes to the internet, leads expect an immediate response. Since there is no in-person meeting, homeowners need extra reassurance that their future real estate agent is always available and ready to meet their requirements.

Furthermore, NAR found that 73% of buyers interviewed only one agent, and 82% of sellers worked with the first agent they contacted in 2021. Therefore, being the first to respond to your leads can help you beat the competition. 

Speedy communication is not the only factor that will help you improve lead conversion. Instead of giving up when a lead doesn’t respond right away, stay persistent with multiple follow-ups.

According to Stucco, the average real estate lead requires 8 to 12 interactions with a sales agent before that individual is ready to transact. Don’t be afraid to try different approaches to warm them up.

Educate Your Leads

Another frequently overlooked tip is providing education. Taking the time to offer value ultimately makes leads more likely to work with you. Many agents fail to convert leads because they don’t prioritize this step. 

As most people are not real estate experts, they lack basic knowledge of the local market and the processes involved in buying and selling real estate. It is your job to showcase how your knowledge and expertise will make the journey more seamless for them.

Statista data reveals that 37% of agents are able to convert leads when they address their challenges head-on. 

So rather than sending the same information to your entire list, provide insights that directly relate to your leads’ specific pain points. This will help you stand out from the competition in the best way. 

Be There for Your Leads

Emotional support is equally important in the lead nurturing process. reports that 40% of Americans considered buying a home to be the most stressful event in their life. 

So in addition to offering your industry expertise, make sure to listen to your leads and validate their fears or concerns. 

NAR found that the most important factors in choosing a real estate agent were honesty and trustworthiness. Emotional intelligence can go a long way in gaining your leads’ trust and helping them feel comfortable enough to take the next step. 

Specifically, recognize the fact that your leads aren’t just buying or selling a real estate property—it’s their home. 

Take Advantage of Automation

Nurturing leads can seem like a time-consuming process, which might prevent agents from making it a priority. Luckily, there are a myriad of real estate technology tools that can help you automate this initial stage of lead engagement.

As AI continues to transform the real estate industry, incorporating the latest innovations into your marketing strategy can take your lead conversion efforts to the next level. 

One such tool is Landslo’s digital real estate assistant. He allows you to put hot lead engagement and past client outreach on autopilot, while still keeping every communication as personal as possible. 

Landslo can provide leads with home buying and selling tips, as well as local market data and listings that are tailored to their specific needs. Plus, Landslo is readily available to respond immediately to questions and inquiries at any time of day.

Automating these pieces of the lead nurturing process will free up your time and energy to focus on the tasks that require human intervention.

To learn more about all the ways that Landslo can help support lead conversion, schedule a free demo.

Final Words

While the lead conversion rate might be low in the real estate industry, brokerages and agencies do have the power to make improvements. 

By following these crucial tips, you can improve your lead nurturing process and boost conversion rates to successfully scale your business.

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